According to Money Magazine, more than two thirds of Americans want to improve their financial situation in 2020. Approximately 50% of American would like to save more and pay down debt. Roughly a third of Americans would like to spend less.

For me, it is far more sustainable to start out by taking small baby steps. Whenever I try to make sweeping changes, I find it difficult to stick to my goals. Here are my suggestions for small but significant changes you can start to make in 2020.

Increase your retirement savings by 1%

Challenge yourself to increase your retirement savings by 1%. You can set this up as an automatic increase and this way you will probably not notice you are saving more. This may not seem like a lot, but here is how it breaks down. If you earn $50,000 per year, you can save $500 more by just making this one tweak. If you have a 401k from an employer, consider making this increase for a Roth IRA or traditional IRA and if self – employed, SEP IRA.

For 2020, the maximum employee contribution is $19,500 if you are under 50. For those over 50, your maximum contribution is $26,000.

Track your spending in specific categories

Using an app like Mint or YNAB track how much you are spending on eating out and entertainment. I find these two categories are where overspending occurs. Start off slowly by tracking a month’s worth of spending without making any changes.

After reviewing your spend in these areas, you may start to see certain patterns of spending. For example, the weekly trip to the Mall or Barnes and Noble. If these are activities that bring fun and pleasure into your life, come up with a plan of how you can still do these things without feeling deprived. For example, if you love going to the Mall on Fridays, come up with a budget of how much you’d like to spend, or better yet, decrease your spending by 10-15%. The idea is not to feel deprived and restricted but to spend consciously.

Maximize your Savings

Consider opening an online high-yield savings account for your emergency fund. Online banks offer much higher rates than traditional brick and mortar banks. Online banks pay a range of 1.70% – 1.90% according to, while traditional brick and mortar bank pays an average of 0.09%. You not only get a better interest rate, but your money is out of sight and out of mind which makes it easier to not spend.

You can stash away a few hundred dollars per year while doing nothing. The average American has $16,420 in a savings account. Based on 2% interest rate, you could save approximately $340.00 per year without doing anything.

Automate your savings

It’s easier to save money when it never enters your checking account in the first place. Start by setting a savings goal and automate the appropriate incremental savings that would equal that goal by the end of year. For example, if you would like to save $1,000, set aside $83.33 monthly using automatic deposit into your savings account. The best thing to do is set it up and forget about it. You do not want to have a debit card associated with this account. It would be very easy to withdraw money if it’s easily accessible to you. Set it up, forget about it and by the end of the year you would reach your goal of $1,000.

Revisit your tax withholding

The IRS re-designed the W-4 form in 2020. This is the form that helps employers collect the correct amount of government taxes from your wages. You don’t need to completely fill out this form every year, however you do need to check it over to ensure your withholdings still makes sense. Here are a few situations that could result in a change in your W-4 form;

  1. A large tax refund or tax bill from previous year
  2. Marriage or divorce
  3. Change in employment status
  4. Change in number of dependents

Adjusting this form is easy and would prevent a headache in the future when computing your taxes. There is nothing worse than having all your carefully saved emergency fund wiped out by taxes in April. If you enjoy a large tax refund, you are giving the government an interest free loan for the year while you could be using that money to invest or pay down interest accruing debt.